Practically Speaking

TANSTAAFL, Mr. Congressman; TANSTAAFL, Mr. Obama!

Posted by Kyle Prast on July 17, 2009 | 34 comments

Common sense, History, President Obama, TAXES, THE ECONOMY, Government / Bureaucracy

One of the first lessons we learned while studying Economics in our home school was "Tanstaafl, the Romans and Us." It was chapter 2 in Richard Maybury's book, Whatever Happened to Penny Candy? The book is simply written but contains invaluable information on the principles of economics and how the world works. Too bad it isn't required reading for every President, Legislator, Judge, Cabinet Member and Czar.

So, what is TANSTAAFL? Tanstaafl stands for: "There Ain't No Such Thing As A Free Lunch." It was a very popular saying during the Great Depression.

Tanstaafl is a law of economics--a fact of life--yet our government and president, in particular, seem to have never learned about it. It says that everything of value carries a cost, or put another way, nothing of value is free. "Someone must pay for it, if not with money, then with time and hard work."

The author, Richard Maybury, then cites the example of the air we breathe--even clean air isn't free because "people work hard and spend lots of money to keep it clean enough to breathe." (Just ask the folks at WE Energies or any manufacturer.)

Chapter 2 opens by discussing the double-digit inflation of the 1970s and early 1980s--the Carter years, something our nation had not really experienced before. (Exception being the Confederate dollar during the Civil War era.) Maybury then compares what went on in ancient Rome with our economic woes. Imagine if this book was written today? The US Deficit just hit $1 TRILLION dollars, a new all time high, and could reach $1.8 or so Trillion by year's end.

Ancient Rome was famous for its road system and wars to conquer other nations. Both of those things require money. Lots of money. Public works projects and a large standing army require funding. How do you do that?

Tax the people, right? Rome was also famous for its taxes. (Remember the Christmas story? Mary and Joseph had to go to Bethlehem to be taxed and counted in the census?)

Well, to pay taxes, you have to have some sort of job. Hence, another thing we have in common with the Roman Empire; they had a large welfare program.

So Rome had public works projects, a large standing army, and welfare to fund, but very little actual manufacturing or productivity in their country. You can only tax so much--even if you are Rome!

The Emperors knew that too high a tax rate might result in revolt, not polite Tea Parties, but actual revolt. Today, we would just inflate the money supply by printing more money. They used silver coins so they solved the problem by clipping off the edge of each coin collected in taxes and then melting the clipped parts to mint more coins. Of course the money was not worth a full Denarius anymore, but the Roman government did it anyway. They wanted to fund their wish list of public works, army, and welfare programs to keep the unemployed masses happy. They hoped nobody would notice.

But the merchants did notice. After a few close shaves, the coins were noticeably smaller and lighter. Merchants started to refuse clipped money or required 2 clipped coins for one real one. The currency was DEBASED.

DEBASING currencies and INFLATION go hand in hand. Not just in Rome but in the USA. At its extreme, this is what happened in pre WW2 Germany, where a wheelbarrow of German Marks was needed to purchase a loaf of bread.

Today, Europe and China are concerned about how much we have inflated our money supply. Our Secretary of the Treasury was laughed at in China when he told them the dollar was secure. Savvy Americans are concerned too. That is why you hear so much talk of investing in gold.

The only ones that don't really believe in TANSTAAFL are the politicians proposing one costly measure after another without the ability to pay for it: TARP under President Bush, and now President Obama's BAIL-OUTS, STIMULUS 1, CAP and TRADE, NATIONAL HEALTH CARE, and now talk of STIMULUS 2.

Keep TANSTAAFL in mind. It applies to all aspects of life. Everything has a cost, whether it is money, time, effort, loss of quality of life. Nothing is free; someone always pays for it.

Just like the laws of Physics that state you cannot create energy out of nothing, you cannot create money out of nothing either, not even to fund unprecedented government spending. It's because TANSTAAFL.

If you have not called your Senators, do so. (I heard that Kohl was showing signs of weakening on Cap and Trade on Marl Levin last night?) A polite call is the most effective and I make sure they take my name. I urged them both to oppose Cap and Trade, Health Care Reform and threw in opposing Sotomayor too.
US Senate Members

Senator Herb Kohl: (202) 224-5653, Senator Russ Feingold: (202) 224-5323


More reading:

545 people I wish would read "Whatever Happened to Penny Candy" Rounding the 'net: The 545 people responsible for all of America's woes

Vice President Biden should read it too: "We Have to Go Spend Money to Keep From Going Bankrupt"

Past Post: I'm going into the wheelbarrow biz, or the "Peso-fication of the US$

Links: 

Brookfield7, Fairly Conservative, BetterBrookfield, Vicki McKenna, Jay Weber, The Right View Wisconsin, Randy Melchert, Mark Levin, The Heritage Foundation, CNS News